UNAIR NEWS – Starting in January 2025, the government will raise the retirement age from 58 to 59 as part of a long-term strategy outlined in Government Regulation No. 45/2015 on the Pension Insurance Program. The updated policy applies to workers registered under BPJS Ketenagakerjaan’s Pension Insurance (JP) program.
Weighing in on the policy, Prof Jusuf Irianto, a Public Policy expert at Universitas Airlangga (UNAIR), noted, “This change is not particularly groundbreaking, as the regulation has been in place since 2015. What we’re seeing now is a continuation of provisions already set in motion, based on monitoring and evaluations conducted over the last decade.”
Changes to retirement age
Under Government Regulation No. 45/2015, the retirement age is scheduled to increase by one year every three years. This adjustment began in 2019 when the retirement age was set at 57. It will continue to rise incrementally until it reaches 65. “The increase in retirement age isn’t a new policy—it’s simply a continuation of an existing plan,” added Prof Irianto.
Workers turning 59 in 2025 will begin their retirement phase and can start receiving benefits through BPJS Ketenagakerjaan’s Pension Insurance Program. Those who turn 58 in 2025 will retire in 2026 when they reach 59. The policy provides clear guidelines on retirement benefits, helping workers plan their finances as they approach retirement.
“One benefit of this policy is that it offers workers the flexibility to continue working after reaching the retirement age. They can choose to claim their pension benefits at the designated age or defer them until they decide to retire completely,” said the UNAIR FISIP professor.
Implications of retirement age hike
The adjustment to the retirement age brings notable changes to the labor market. Allowing employees to work up to three years beyond the retirement threshold enables companies to retain skilled and experienced personnel, reducing the costs associated with recruitment and training. For workers, however, the primary challenge lies in maintaining their health and productivity amid shifting workplace demands.
“Employers should invest in health programs to ensure employee well-being and adopt effective aging workforce management strategies,” suggested Prof Irianto.
Another significant concern is the reduced job availability for younger generations, including millennials and Gen Z, due to delayed retirements. To counter this, the government must create additional job opportunities to mitigate rising unemployment and capitalize on the country’s demographic dividend.
“Delays in senior employee retirements narrow job openings for younger generations. The government must actively expand the job market to prevent a surge in unemployment,” he concluded.
In addition, it is crucial for the government to enforce stricter regulations on the employment of foreign workers. Ideally, foreign workers should be limited to roles that facilitate technology and knowledge transfer rather than taking on manual labor or blue-collar jobs. “Job opportunities across all sectors must prioritize national or local workers, not foreign labor,” Prof. Irianto emphasized in his interview with UNAIR NEWS.
Author: Anggun Latifatunisa
Editor: Yulia Rohmawati
